If you’ve been looking for a safe, government-backed investment that offers attractive returns, the Post Office Term Deposit Scheme is worth considering. Recently, investors have been buzzing about how you can turn Rs 5 lakh into Rs 15 lakh by using this scheme strategically. But how does it really work? How is the calculation done? And is it suitable for you.
In this detailed, easy-to-understand guide, we’ll explain how you can triple your investment, break down the math, and give you practical advice to make the most of the Post Office Term Deposit (TD) Scheme. Whether you’re a beginner, a retiree, or a financial professional, this article will help you understand everything you need to know.
Post Office Term Deposit Scheme (March 2025)
| Feature | Details |
|---|---|
| Scheme Name | Post Office Term Deposit (TD) Scheme |
| Interest Rates (2025) | 1-year: 6.9%, 2-year: 7.0%, 3-year: 7.1%, 5-year: 7.5% (compounded quarterly) |
| Investment Amount Example | Rs 5,00,000 |
| Maturity Amount After 15 Years | Approx. Rs 15,24,149 (with reinvestment strategy) |
| Government Backing | 100% backed by the Government of India |
| Tax Benefit | 5-year TD eligible for tax deduction under Section 80C of the Income Tax Act |
| Official Website | India Post |
The Post Office Term Deposit Scheme is a smart, safe investment option for anyone looking to grow their money with guaranteed returns. By simply reinvesting your matured amount every five years, you can turn an initial investment of ₹5 lakh into over ₹15 lakh in 15 years.
This strategy is ideal for conservative investors, retirees, or anyone who prefers stability and steady growth without market risks. Plus, the added tax benefits under Section 80C make it even more attractive.
For the best results, stay consistent, reinvest your returns, and keep an eye on interest rate revisions. You can confidently plan long-term financial goals like retirement, education, or wealth building with this government-backed tool.
What is the Post Office Term Deposit (TD) Scheme?
The Post Office Term Deposit Scheme is one of India’s most trusted savings instruments. It works similarly to a bank Fixed Deposit (FD) but is backed by the Government of India, making it low-risk and stable.
Key features:
- Available for 1, 2, 3, or 5 years.
- Interest is compounded quarterly, but paid annually.
- After maturity, you can reinvest the amount to keep growing your savings.
see also: 444 Days FD vs 555 Days FD: Where Will You Get the Best Returns?
Current Interest Rates (Effective March 2025)
| Tenure | Interest Rate (p.a.) |
|---|---|
| 1 Year | 6.9% |
| 2 Years | 7.0% |
| 3 Years | 7.1% |
| 5 Years | 7.5% |
How Can You Turn Rs 5 Lakh Into Rs 15 Lakh?
Here’s the exciting part—compounding and reinvestment are the key.
Let’s break it down step by step:
Step 1: Invest Rs 5 lakh in a 5-year TD @ 7.5%
- Investment Amount: ₹5,00,000
- Interest Rate: 7.5% p.a. (compounded quarterly)
- Tenure: 5 years
Maturity Amount after 5 years:
Using quarterly compounding:
₹5,00,000 × (1 + 7.5% ÷ 4)^(4×5) ≈ ₹7,24,974
Step 2: Reinvest ₹7,24,974 for another 5 years at 7.5%
After the first 5 years, reinvest the entire maturity amount:
₹7,24,974 × (1 + 7.5% ÷ 4)^(4×5) ≈ ₹10,51,175
Step 3: Reinvest ₹10,51,175 for the next 5 years at 7.5%
Final reinvestment:
₹10,51,175 × (1 + 7.5% ÷ 4)^(4×5) ≈ ₹15,24,149
Result:
Your ₹5 lakh becomes ₹15.24 lakh in 15 years!
Why is Post Office TD a Safe Choice?
- Government Guarantee: Backed by the Government of India.
- Fixed Returns: No stock market risks or volatility.
- Tax Savings: The 5-year TD qualifies for Section 80C deduction (up to Rs 1.5 lakh per year).
- Flexible Tenure Options: You can choose from 1, 2, 3, or 5 years.
- Easy to Open: Available at any India Post branch.
Detailed Calculation Example
Here’s a clear example of how much you’ll earn over time:
| Year | Principal (₹) | Interest Earned (₹) | Total Maturity Value (₹) |
|---|---|---|---|
| Year 1-5 | 5,00,000 | 2,24,974 | 7,24,974 |
| Year 6-10 | 7,24,974 | 3,26,201 | 10,51,175 |
| Year 11-15 | 10,51,175 | 4,72,974 | 15,24,149 |
Who Should Invest?
Retirees & Senior Citizens: Stable income, risk-free.
Parents Planning for Children’s Education/Marriage: Safe, long-term.
Professionals Seeking Tax Savings: Section 80C benefits + compounding.
Conservative Investors: Those who prefer capital protection over high returns.
see also: Tax Saving FD: Golden Opportunity to Save Tax Before the End of March
Post Office Term Deposit Scheme FAQs
Q1. Is there any tax on Post Office Term Deposit interest?
Interest earned is taxable as per your income slab. However, you can claim TDS exemption if interest is below ₹40,000/year by submitting Form 15G/15H.
Q2. Can I withdraw my TD early?
Premature withdrawal is allowed after six months. However, you’ll earn a lower interest rate (typically 1% less).
Q3. How can I open a Post Office TD account?
You can visit any India Post Office branch or use India Post’s online portal to open the account.
Q4. Are Post Office TD returns better than bank FDs?
Yes, Post Office 5-year TD offers 7.5% interest, usually higher than most banks’ FD rates (generally around 6.5%-7%).
Q5. Is there a limit on the deposit amount?
No maximum limit. However, there is no additional interest benefit for large deposits.
